Remarks by John C. Bogle, '47
Former Chairman of the Board of Trustees, Blair Academy and
Founder and Former Chairman, The Vanguard Group
Inaugurating The Hollerith Lecture Series at Blair Academy
Blairstown, NJ
April 2, 2002

Good evening. It is both a privilege
and a thrill to deliver this first address in the Hollerith Lecture
Series at Blair Academy. The series is named in honor of Dr. Herman
Hollerith (1860-1921), whose 1884 invention of a tabulating machine
system based on punching holes in a paper tape and recording data
electronicallythe precursor to the digital world that we all
take completely for granted todaywas recently described by
London's Economist magazine as one of the ten most important
scientific events of the past millennium. We are deeply indebted
to his grandson, Richard Hollerith Jr., father of Susan Hollerith
Cashin, Blair '85, for his interest in this lecture series, exposing
Blair students and the Blairstown community to the ideas of entrepreneurs
and business leaders.

It's a wonderful coincidence that this inaugural
lecture is being given here in the Armstrong-Hipkins Center for
the Arts, for this building bears the name of my great-grandfather
Philander Banister Armstrong (1847-1928), not only an almost exact
contemporary of Herman Hollerith (1860-1921), but, like him, a remarkable
American entrepreneur of that era. Grandpa Armstrong, as even my
generation refers to him, undertook his innovations in the insurance
field. According to his biography, he organized five insurance companies,
all based on the concept of "mutuality in the offering of financial
services . . . (using) methods that are original and dramatically
opposed to almost every recognized financial firm . . . dealing
directly with the client without the intervention of agents
or brokers . . . (While) severely criticized by his opponents, his
methods, accompanied by his boldness often amounting to audacity,
have achieved success and approval by the public." He climaxed
his career by writing, in 1917, A License to Steal (subtitled
"Life Insurance, The Swindle of Swindles"), a book that
challenged the life insurance industry"a good thing gone
wrong"to reform.

Dr. Hollerith's entrepreneurial talents were focused
on mechanical devices that would vastly improve and supply the then-tedious
process of tabulating hundreds of millions of bits of data, earning
him the title "the first statistical engineer." Grandpa
Armstrong's entrepreneurial talents, on the other hand, were focused
on a mutual corporate structure that would improve the terms
under which financial services would be offered to the public, arguing
that "life insurance has become one of the necessities of modern
civilization, and it should be furnished at cost." But
both men apparently shared these characteristics: A willingness
to open their eyes to the unconventional and the innovative, and
an ability to look at fields in which they plied their trades and
say, in effect, "I can add to economic progress and make our
world better." And so they did. This evening, as the spirits
of these two contemporaries and fellow entrepreneurs meet in this
hall, I hope that they are looking each other in the eye, shaking
hands, and simultaneously saying, "well done!"

Schumpeter's Theory of Economic Development

When these entrepreneurs did their work, the word
"entrepreneur" had not yet come into its present use:
"A person who undertakes and organizes an enterprise, often
with considerable initiative and risk." (The word originally
meant, "a director of a public musical institution.")
The man who popularized today's definition was their near-contemporary,
Joseph A. Schumpeter (1883-1950), who in his The Theory of Economic
Development in 1911 first recognized the entrepreneur as the
moving force in economic progress. Interestinglyand importantlySchumpeter
dismissed material and monetary gain as the prime mover of the entrepreneur,
concluding that these three motives were far more powerful:

"The dream or the will to found a private
kingdom."

"The will to conquer, the impulse to fight
. . . to succeed for the sake, not of the fruits of success,
but of success itself."

That definition rings true to me, and I suspect it
could also be applied to both Dr. Hollerith and Mr. Armstrong, whodespite
the vast difference in the fields in which they chose to apply their
energy and ingenuitywere like all entrepreneurs: At once inventors,
pioneers, salesmen, businessmen, company founders, and persons of
strong character.

Tonight, more than a century after the acute insights
of the legendary Hollerith and the iconoclast Armstrong, it is my
privilege to talk a bit about entrepreneurship in the modern era,
using as my example about the creation and building of an organization
that owes its very existence to the kind of entrepreneurial of spirit
reflected in Schumpeter's shrewd insights. I'm speaking, of course,
of The Vanguard Group, the company I founded nearly 28 years ago.

From Blair to Vanguard: The Long and Winding Road

In many respects, the foundation of Vanguard was
laid right here at Blair Academy 57 years ago, almost to the day.
On April 9, 1945, I was accepted at this splendid place as a member
of the Class of 1947. Not only admitted, but given a scholarship
and a job (as waiter, and later as captain of the waiters), without
which neither I nor my brothers (David, '47, and William '45) could
possibly have attended. We'd previously attended a small rural high
school at the New Jersey shore, but our parents and grandparents
had higher aspirations for our education.

While Blair was a great leap forward in our lives,
the academic demands were large and the transition painful. But
the outcome was commensurately rewarding. I started with a miserable
grade of 40 in Jesse Witherspoon Gage's Algebra class, but my final
grade of 100 was then thought to be the only perfect score he had
ever awarded. And in Marvin Garfield Mason's English class, this
demanding master drummed into me an inspirational sentence from
Macaulay's essay on Samuel Johnson that I have never forgotten:
"The force of his mind overcame his every impediment."

Blair represented not only an important step in my
intellectual life, but a character-building step as well. I thrived
among wonderful classmates and the vigorous discipline of the school,
graduating second in my class, and voted "Best Student"
and "Most Likely to Succeed," accolades which both offered
a hint of the determination that I still can't seem to shake, but
also, perhaps, a harbinger of the entrepreneurial spirit that would
later shape my career.

Blair, too, was the springboard that launched me
into Princeton University. No Blair, no Princeton. It is as simple
as that. And it was at Princeton that I had yet another of the marvelous
strokes of good fortune (literally!) that had so often punctuated
my life. In December 1949, while researching topics for my senior
thesis, I stumbled upon an article in Fortune magazine entitled
"Big Money in Boston," and discovered the mutual fund
industry. When I read that "mutual funds may look like pretty
small change" but constituted a "rapidly expanding and
somewhat contentious industry that could be of great potential significance
to U.S. business," I knew immediately that I had found my topic.
After a year-plus of intense study, I completed the thesis and sent
it to several industry leaders, including Walter L. Morgan, industry
pioneer and founder of Philadelphia's Wellington Fund. He liked
what I had written and was later to write: "A pretty good piece
of work for a fellow in college without any practical experience
in business life. Largely as a result of this thesis, we have added
Mr. Bogle to our Wellington organization." I started my new
job right after my graduation in 1951.

Following the depression years of the 1930s, few
young men had entered the investment field, and far fewer were employed
in the then-tiny mutual fund industry, its total assets of just
$2½ billion a pale shadow of today's $7 trillion megalith.
When I joined Wellington Management Company, which managed Wellington
Fund, it too was tiny. I moved up rapidly; in less than a decade,
I had become Walter Morgan's heir-apparent. By the early 1960s,
I was deeply involved in all aspects of the business, and, in early
1965, when I was just 35 years old, he told me that I would be his
successor. The company was in troubled straits, and Mr. Morgan told
me to "do whatever it takes" to solve our investment management
problems. I realized that a great opportunity had been presented
to me.

A Merger and a Firing

Headstrong, impulsive, and naïve, I found, in
Boston, a merger partner that I hoped would provide the solution.
We merged our firm with theirs in 1966. Alas, despite the early
glitter, the substance proved illusory. The merger worked beautifully
for about five years, but the aggressive investment managers whom
I had too opportunistically sought as my new partners let our fund
shareholders down. First, our funds lagged as the stock market continued
to rise through 1972; then, they led the market downward in the
devastating 50 percent drop that followed. The fund assets we managed
plunged by half from $2.5 billion in early 1973 to $1.3 billion
in late 1974. Not surprisingly, my new partners and I had a falling
out.

But my adversaries had more votes on the Company
Board that I did, and it was they who fired me from what
I had considered "my" company. The mergerperhaps
the first evidence of my entrepreneurial spiritwas a failure.
But my failure was not in getting fired, but in jumping on the speculative
bandwagon of aggressive investing in the first place. In retrospect,
this failing was little short of disgraceful, and I can only be
embarrassed about the fact that my determination to move quickly,
my naivete, and my eagerness to ignore the clear lessons of history
led me into such an error of judgment. Life was fair, however: I
made a big error and I paid a high price.

After their victory, my former partners intended
to move all of the Wellington organization to Boston. But I wasn't
about to let that happen. I intended to keep Wellington Fund in
Philadelphia, where it was formed, where its roots had taken hold,
and where it belonged. And I had an idea of how to do just that.
For when the door slammed, a window opened. It gave me a second
chance to exercise my entrepreneurial spirit. My idea was to parlay
a slight difference in the governance structure of the Wellington
funds, owned by their own shareholders, and Wellington Management
Company, controlled by my former partners, into a new career
that held the promise of changing the very structure under which
mutual funds operated. Pulling off this trick would not be easy.
Doing a deed without precedent never is.

The Source of the Idea

The idea of creating a new and better form of mutual
fund structure may well have had its genesis in that Princeton senior
thesis of a quarter-century earlier. I had concluded the thesis
with several major themes: The industry's future growth could be
maximized by a "reduction of sales loads and management fees;"
the principal function of a mutual fund should be sound management
(not peripheral activities), that funds should refrain from making
"excessive claims of management ability;" and that "the
prime responsibility of mutual funds must always be their shareholders
. . . to serve them in the most efficient, honest, and economical
way possible." Simply stated, my idea was that the mutual fund
industry would do better for itself if it did better for its shareholders.
That simple concept of giving the investor a fair shake was the
rock on which Vanguard would be founded a quarter-century later.

But how could that goal be accomplished? Again, with
the essence of simplicity. Why should our mutual funds retain an
outside company to manage their affairsthen, and now,
the modus operandi of our industrywhen the funds could
manage themselves and save a small fortune in fees? Our mutual
funds would, uniquely, be truly mutual. They would be run,
not in the interest of an external advisera business whose
goal was to earn the highest possible profit for itselfbut
for their own shareholder/owners. The battle was hardthe Fund
Board was almost evenly dividedbut this new structure finally
carried the day.

Steps and Stumbles

To operate under the new structure, we needed to
form a new company, and I struggled to find just the right name
for it. Just as lightning had struck in the form of an article in
Fortune in 1949, so it struck again in 1974 in an antique book,
The Naval Achievements of Great Britain-1789-1817. When I
bought some old naval prints for my office, quite by accident, the
book fell into my hands. One of its chapters described the great
British victory over Napoleon's fleet at the Battle of the Nile
in 1798. There, I read Lord Nelson's inspirational congratulatory
dispatch to his crew, signed on the deck of his flagship, HMS
Vanguard, and I knew immediately that I had found my company's
name.1 Under a formal banner inscribed
"The Vanguard Group of Investment Companies," the new
flagship was launched on September 24, 1974. Just as during the
Napoleonic wars Nelson's fleet had come to dominate the seas, I
hoped that by the late twentieth century our new flagship would
come to dominate the mutual fund seas.

My idea suffered a setback when the Fund directors
allowed Vanguard (owned, under our new mutual structure, by the
funds themselves) to handle solely the Fund's administration,
which comprises but one of the three sides of the triangle that
represents mutual fund operations. Our crew, numbering only 28 members
when we began our voyage, was responsible only for the Fund's operating,
legal, and financial affairs. The two more critical sides of the
triangleinvestment management and share distributionwere
to remain with my rivals at Wellington Management. Yet I fully realized
that our own destiny would be determined by what kind of funds we
created, by whether the funds could attain superior investment returns,
and by howand how effectivelythe funds were marketed.
And I would not preside over these activities.

The setback left me with little room to develop the
fully mutualized organization that I had envisioned for the new
firm. The fact that investment management was outside of Vanguard's
mandate led me, within months, to an action that, today, seems obvious
but was then unprecedented. I brought to fruition an idea I had
toyed with for years. Based on evidence that I had ascertained in
my Princeton thesis, I had also written that mutual funds should
"make no claim to superiority over the market averages."
Was this thought the precursor of my later interest in simply matching
the market with an index fund? Honestly, I don't know. But the moment
that I wrote those words in 1951 may well have been when the seed
was planted that germinated into this recommendation to the Board
of Directors in September 1975: Vanguard should form the first market
index mutual fund in history.

An Index Fund, a New Distribution Network, a Novel
Bond Fund

The trick of the index fund, I argued to the Board
in September 1975, was that it didn't require "investment
management." It would simply own each of the 500 stocks in
the Standard & Poor's 500 Index. This partially disingenuous
argument narrowly carried the day, and with this step into quasi-management,
we had edged into the second sidethe investment sideof
the fund triangle. By the time 1975 ended, we had started the fund.
First Index Investment Trust (now named Vanguard 500 Index Fund)
was derided for years and was first copied only after nearly a decade
had passed. But today this index fund, called "Bogle's Folly"
at the outset, is the largest mutual fund in the world.

How did we get to the third and final side of the
triangleshare distribution? Once again, we devised a novel
solution to a seemingly complex challenge. The novelty? We proposed
to eliminate the very need for distribution. We would do
away with the network of brokers that had distributed Wellington
shares for a full half-century, relying, not on sellers to sell
fund shares, but on buyers to buy them. And after another
divisive battle, we took that step in February 1977, converting
overnight from the traditional broker-dealer selling system to a
sales-charge-free, no-load marketing system. We've never looked
back. We've never had to.

There was really only one further step in the evolution
of Vanguard's central concept. It began just before the no-load
decision and was completed shortly thereafter. In 1976, Congress
had passed a law enabling the creation of municipal bond funds,
and we began to plan our own entry. Clearly, being the industry's
low-cost provider would give us a huge leg up in offering such an
income-oriented vehicle, and, even better, most of the existing
funds carried initial sales charges that could erase a full year's
income for the investor. What is more, even as I had come to believe
that precious few stock managers could outguess the stock market,
so I had come to believe that precious few bond managers could outguess
the bond market by accurately forecasting the direction and level
of interest rates. Yet our peers, by offering "managed"
bond funds were implicitly promising they could do exactly thata
promise that could not be fulfilled.

Here arose another simple insight, in its own way
as obvious as the index fund. Why not depart from the crowd, forming
not a single tax-exempt bond fund, but a three-tier
bond fund with three series: one, long-term; one, short-term;
and oneyou guessed itintermediate-term. All would
be available without sales loads and at minimal cost. It's difficult,
in truth, to imagine a more banally simple idea for a mutual fund.
But it had never been done before. And it changed the way
investors would think about bond investing. We later applied the
three-tier structure to our corporate and U.S. Treasury bond funds,
and almost overnight it became the industry standard. Yet another
Vanguard innovation, and it had changed the rules of the game.

Strategy Follows Structure

Yes, we had the insight to recognize the opportunities
associated with implementing a low-cost, index-oriented, structured-portfolio
strategy. But, given the elementary mathematics of the market, that
insight is so startlingly obvious that it must have been
shared by many other firms in our industry. All of our rivals had
the same opportunity but, just like the prime suspect in
a murder mystery, we alone had the motive. Because of our
very structure, the finger of guilt, as it were, pointed
directly at Vanguard. We sought low costs; our rivals, because
they earn their profits from the amount of fees they receive, aren't
exactly eager for fee reductions.

Our structure, then, played not only a vital, but
essential, role in shaping our strategy. It established us as industry
leaders, not only in index funds and bond funds, but in the then-burgeoning
money market fund arena, where the link between lower cost and higher
yield is virtually dollar for dollar. Strategy follows structure.
Our fundamental strategy, developed long before the movie Field
of Dreams popularized a phrase that inspired the creation of
a baseball diamond in Iowa, was based on this now familiar tenet:
If you build it, they will come.

It took years for the investment world to recognize
the intrinsic value of the investment diamond that our new structure
represented, and of the particular brand of mutual funds fostered
by that structure, but the investors finally came. And they came
by the millions.

Opposition from a Formidable
Source

The structure we had built during those struggles,
however, was still built on sand. In 1977, the Securities and Exchange
Commission had given us only a temporary order allowing us
to take some of the crucial, but unprecedented steps required to
make Vanguard a fully functioning mutual fund enterprise. We endured
a two-week regulatory hearing in 1978 and subsequently filed mountains
of documents and legal arguments. Astonishing as it may seem today,
in 1980, nearly three years after giving us its temporary approval,
the SEC reversed its position and ruled that we could not
continue. Aghast, for I knew we were doing what was right for shareholders,
we mounted a vigorous appeal, and we triumphed. The SEC did an about-face,
and, in 1981, after a struggle that had lasted four years,
finally approved our plan, with these words:

The Vanguard plan actually furthers the objectives
[of the Investment Company Act of 1940] by ensuring that the Funds'
directors . . . are better able to evaluate the quality of services
rendered to the Funds. The plan fosters improved disclosure .
. . clearly enhances the Funds' independence . . . and promotes
a healthy and viable fund complex.

The words in the Commission's powerful endorsement
made the struggle worthwhile. At last, our rock foundation was firmly
in place.

What Our Entrepreneurship Produced

Now, I recognize that the creation of a new company
out of the remnants of an existing company may not quite qualify
as entrepreneurship. But we did have quite a number of entrepreneurial
things going on in Vanguard's development. First was the creation
of a new form of governance in the mutual fund industry, a mutual
structure in which the interests of fund investors take precedence
over the interests of fund managers and distributors. A second was
creating the world's first index fund, a passive portfolio designed
simply to provide the returns provided by the stock marketa
challenge few portfolio managers have met over time. The third was
creating a new paradigm for bond fund management. The fourth, abandoning
a proven distribution system in favor of a new and untried one.
Fifth is the sheer energy required to get it all done, despite a
divided board of directors and the initial opposition of a Federal
agency. And a sixth, I suppose, is the determination required to
ignore, not only our dog-eat-dog competitors that were traveling
a very different road, but the difficult financial market conditions
that saw investor money leaving our small complex for 82 consecutive
months, a blood-letting that didn't end until 1982. It helped that
I never entertained a single doubt about either our strategy or
our structure.

It took a few years to get on our feet after we began.
But by 1980 our assets had doubled, from $1.4 billion to $2.8 billion.
They doubled again to $5.6 billion in 1982, again to more than $10
billion in early 1985, again to $24 billion as 1986 ended, again
to $48 billion in 1989, once again in 1992 to nearly $100
billion, then to $200 billion by mid-1996, and again to $400
billion in 1998. No one thought that remarkable record could continue,
and it didn't. Nonetheless, despite the tough financial markets
since the bubble burst, our assets now exceed $600 billion. Today,
our three simple, basic strategiesstock index funds, structured
bond funds, and money market fundsare all structured to reflect
our low-cost advantage in the most obvious, most favorable light.

The powerful engines that have driven our growth are
the assets of this simple group of funds$425 billion, 70%
of our $600 billion asset baseand have accounted for 90% of
our net cash inflow. What is more, we have also applied the principles
on which they are basedan emphasis on rock-bottom operating
costs, minimal portfolio turnover, no sales charges, diversified,
investment-quality portfolios, and clearly-defined objectives and
strategiesto substantially all of the remainder of our assets,
largely actively-managed equity funds. Importantly, our strategies
are mutually reinforcing in the marketplace of intelligent long-term
investorsindividual and institutional alike, whom we have
chosen to servean internally-consistent strategy that is one
of the keys to business success.

The Fruits of Success . . . or Success for It's
Own Sake?

I want to close by returning to Schumpeter's thoughts
about the motives of the entrepreneur, and the role of monetary
reward. While entrepreneurs are a vital moving force in human economic
progress, and while their motivation can well be ascribed to the
dream of founding a kingdom, the will to conquer, the impulse to
fight, the joy of creativity and ingenuity, and the exercise of
one's energy, there's normally every reason entrepreneurs should
profit from those qualities, and little reason they should not.

In the field of industry, not all ventures succeed,
and handsome profits on those that do is the norm. While at least
one of Dr. Hollerith's inventions (an air brake system for railroad
engines) failed, one was pricelessthe electronic punch card
and tabulating machine system. Doubtless he prospered from it and
presumably turned a substantial profit when he sold his company
in 1911. But, other entrepreneurs have ignored patent rights and
given their inventions free of charge to the public. Most recently
Linus Torvalds, a young Finnish computer programmer, offered his
Linux operating system which he designed as an alternative to Windows
and Mac, without cost to anyone with a computerso-called "open
service software." While Linux has faced slow going so far,
it's competitive, and its less finicky, and more reliable characteristics
may one day enable it to beat these giants at their own expensive
game. If it happens, it would be an exciting advance in the information
age, and Schumpeter, who coined the phrase "creative destruction,"
would be applauding from his other-worldly perch.

Yet another entrepreneur, a man
recently described as "America's first entrepreneur,"2
also eschewed personal gain. Like many entrepreneurs, Benjamin Franklin
was also an inventor, creating, among other devices, the lightning
rod and the Franklin stove. He made no attempt to patent the lightning
rod for his own profit, and declined an offer by the Governor of
the Commonwealth for a patent on his Franklin stove. The "Pennsylvania
fireplace" he invented in 1744 to economize on fuel and dramatically
improve the efficiency of home heating was designed to benefit the
public at large. Franklin believed that, "knowledge was not
the personal property of its discoverer, but the common property
of all. As we enjoy great advantages from the inventions of others,"
he wrote, "we should be glad of an opportunity to serve others
by any invention of ours, and this we should do freely and generously."

Dr. Franklin also created, in 1752, America's first
insurance companya mutual insurance company owned not
by a profit-making firm, but by the policyholders themselves. The
Philadelphia Contributionship recently celebrated its 250th anniversary,
a record of longevity that I doubt can be matched by any company
in America. And I hope you'll recall that Grandpa Armstrong also
was, well, in the vanguard of creating mutual insurance companies.
(Though, like Dr. Hollerith, Mr. Torvalds, and Dr. Franklin, he
too became a most prosperous citizen.)

Mutuality

And so it was at Vanguard. We created a company that
patented neither its structure nor its index fund nor its new process
of bond fund management. Yet, paradoxically, it is these aspects
of Vanguard that have become our trademarks. And it works, because
this mutuality, of course, offers a singular advantage in the financial
field. When buying most goods and services, who among us, really,
can be the arbiter of the relationship between the cost we pay and
value an objecta "thing"holds for us? But
when buying financial services, the trade-off between cost and value
is most often directdollar for dollar. In such a case, beauty
is no longer in the eye of the beholder. Beauty is in the share
of financial market returns that accrue to investors as compared
to financial intermedaries. Or, put less kindly, in the division
of the receipts of the casino between gamblers and croupiers.

How much does this allocation of returns matter? Greatly!
If the return of the stock market is 10% annually, and the cost
of investing (as the evidence indicates) is 2½%, investors
will receive 7½%. Compounded over thirty years, $1 that earns
a 7½% annual rate grows to $8.75. But $1 compounded at 10%
grows to $17.50. Double the return, simply by eliminating costs.
And owning the market is easily accomplished through an all-market
index fund. So excising as much cost as possible from the financial
market equationwhat I've tried to do for investors in the
fund fieldor from the field of insuranceas Dr. Franklin
and Grandpa Armstrong did for policyholdersconstitutes both
a sure-fire, common sense formula for financial success that provides
great advantages to the public and a winning business strategy.

I must confess to being amazed by the rife parallels
in the business careersand the entrepreneurial philosophiesof
myself and my great grandfather, all the more so since it has only
been in the last few years that I've learned in depth of his accomplishments.

He was dedicated to mutuality.
So am I. And we both had the courage of our convictions and put
them into action in our life's work.

He believed that (as he said in an 1886 speech)
"companies having the smallest expense will have the ultimate
advantage." That's the very concept on which I built Vanguard's
structure and staked our strategy.

He was a driving, prickly man who didn't hesitate
to take on his own directors ("Mr. Armstrong was twice removed
from the management and twice recalled," his biography says.)
Almost the same with me, but I'm still waiting for the second
recall!

He hectored his industry to give the public a fair
shake. ("To save our business from ruin we must at once undertake
a vigorous reform . . . the first step must be to reduce expenses."
Italics in original text.) I've done just the same, saying "costs
matter" so often that it has become my mantra.

Late in his career, he tried to reform his industry
with a powerful book, A License to Steal: Life Insurance, the
Swindle of Swindles. In 1999, when I was exactly the same
age as he was in 1917 when he wrote his book, I tried to do the
very same thing in Common Sense on Mutual Funds: New Imperatives
for the Intelligent Investor.

He liked to turn a few hot phrases in his book.
"Why talk about correcting the present evils (of insurance).
The patent has a cancer, the business is the blood. He is not
only sick into death, he is dangerous to the community. Call in
the undertaker!" I emulated his hyperbole, but, I fear, fell
short: "In the mutual fund industry, the natural order has
been turned on its head. The result not only defies nature, it
defies common sense."

So it appears that we can conclude that the apple's
apple's apple's apple didn't fall very far from his entrepreneurial
tree. We can only speculate why that's the case, but as the saga
I've recounted this evening makes clear, there was lots of luck
involved, lots of challenge, lots of disappointment, and perhaps
even lots of family genes and character. I'm not sure that even
Schumpeter knew the source of the entrepreneurial spirit that contributes
so much to economic progress. But perhaps the examples set by Dr.
Hollerith, and Mr. Armstrong, as well as the story of the surprising
success of Vanguard, will inspire some ideas of your own.

And when you leave Blair, and attend college,
and go out into the world, perhaps these ideas will help you to
capitalize on the infinite opportunities that lie there waiting
for you, always.

1. Another Blair connection:
In 1993, Dr. J. Brooks Hoffman '36, and Blair's legendary Chairman
from 1962 to 1978, presented me with a copy of one of the magnificent
original broadsides that reproduced Nelson's message, printed in
London in 1802. It hangs right outside the door to my Valley Forge
office. Back

2. The title of a seminar on Benjamin Franklin
held at Princeton University last autumn, directed by Assistant
Secretary of Defense, Mahlon H. "Sandy" Apgar, Blair '64.
Back

Note: The opinions expressed in this article do not necessarily represent the views of Vanguard's present management.